Illinois Joint Ventures – Features and Effects

Primo v. Pierini, 2012 IL App (1st) 103553-U discusses the key elements of a joint venture and how it differs from other common business arrangements.

The plaintiff contractor sued a construction manager to recover about $300k in building improvements it made in building a Chicago restaurant.  The construction manager was hired by the restaurant owner and was actively involved in funding the construction.

The construction manager in turn filed a third party suit against the restaurant owner for contribution.  It (the construction manager) claimed that it merely lent money to the restaurant owner and that there was no formal business relationship between them.

After a bench trial, the court found a joint venture existed between the construction manager and the restaurant owner based on their oral agreement to share restaurant profits among other reasons.

The court entered judgment for the plaintiff for nearly $300k and awarded defendant about $150K (one-half of the judgment) in its third-party claim  against the restaurant operator.  The court later reduced the judgment to about $140k after excising over $150k in extras and prejudgment interest from the judgment amount.  Each side appealed.

Result: Reduced judgment (minus extras and interest) affirmed.

Reasons:

The appeals court agreed with the trial court that there was a joint venture between the construction manager and restaurant owner.

– A joint venture is an association of two or more persons or entities to carry out a single, specific enterprise;

-Whether a joint venture exists is a factual inquiry and no formulaic rules ultimately determine whether a joint venture exists;

– Where the parties’ conduct evinces an intent to share profits from a common enterprise, the court will find a joint venture exists;

– The key joint venture elements are: (1) an express or implied agreement to carry on an enterprise; (2) a manifestation of intent by the parties to be associated as joint venturers; (3) joint interest as shown by the contribution of property, money or knowledge by each joint venturer; (4) joint control or ownership over the enterprise; and (5) the joint sharing of profits and losses;

– Like a partnership, each joint venture participant is an agent of the other one and is liable to third parties for another participant’s acts taken in the regular course of the venture’s business;

– Unlike an LLC or corporation, a joint venture is not a separate legal entity (i.e. like a corporation, LLC or limited partnership is): instead, a joint venture is a contractual relationship formed between the constituent venturers;

– Joint ventures can be made up of individuals, corporations, or a combination of the two.

(¶ 56-58).

The court rejected the defendant construction manager’s claim that it was only a lender (and not a partner or joint venturer) to the restaurant business.  The construction manager relied on section 202 of the Illinois Partnership Act (805 ILCS 206/202(a), (c)), which provides that receiving debt repayments from a business venture signals a lender-borrower relationship instead of a profit sharing/partnership one. (¶ 59-60)

Here, the court credited trial testimony that the parties planned to split profits well after the restaurant owner repaid the defendant’s loan.  In addition, the construction manager’s principal’s self-serving written statement that “I am not a partner” wasn’t sufficient to cast doubt on the trial testimony that defendants and the restaurant owner agreed to share profits indefinitely. (¶ 62)

In sum, the defendants’ active and direct involvement in funding the restaurant’s construction coupled with the agreement with the owner/operator to share in the profits manifested the intent to form a joint venture.

Afterwords

– A hallmark of a joint venture is the sharing of profits and losses in a common, one-time enterprise;

– Where one party lends money to another, this generally denotes a lender-borrower arrangement; not a joint venture or partnership one;

– Each enterprise participant’s active involvement in day-to-day functioning of a business, coupled with profit and loss sharing, is strong evidence of joint venture relationship.

 

 

 

 

 

 

 

Accord and Satisfaction: Quick And Dirty

Accord and satisfaction is a legal device utilized to satisfy a monetary obligation when there is genuine confusion as to how much is owed.  It can streamline litigation by eliminating the need for a trial on a contract action based on the parties’ conduct.  

An accord and satisfaction’s key elements are:

(1) a good faith dispute between the parties as to the amount owed;

(2) a not readily calculable (“unliquidated”) amount owed;

(3) consideration;

(4) a shared mutual intent to compromise the claim; and

(5) execution or performance of the agreement.

The “accord” is the agreement; the “satisfaction” is the agreement’s execution or performance.

Where a party tenders a check marked “payment in full”, the check recipient’s act of cashing the check can count as an acceptance (or satisfaction) of the accord. 

Accord and satisfaction only applies where there is an actual dispute between the parties and the monetary amount in question isn’t easily calculable.

Source: Boyer v. Built Properties, 2014 IL App (1st) 132780.

Attorney’s Intrusion on Seclusion and Cyberstalking Claims Against ‘Above the Law’ Blog Dismissed – IL ND

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In Huon v. Breaking Media, LLC, 2014 WL 6845866 (N.D.Ill. 2014), an Illinois attorney sued law blog Above the Law (ATL) and womens’-interest blog Jezebel.com, for reporting on the plaintiff’s arrest and subsequent trial on sexual assault and witness intimidation charges.

The plaintiff was criminally charged after he met a woman responding to a Craigslist ad where the plaintiff claimed he was a talent scout for a modeling agency.  (Now that doesn’t sound sketchy at all!!) (Cough.)

While the sex assault charge was pending, the plaintiff was separately accused of witness tampering.  The plaintiff was eventually acquitted of both charges after a three-day trial.

Plaintiff sued the two blogs after they published articles discussing the charges’ underlying allegations and the eventual trial result.

The plaintiff claimed the various blog articles and some hostile user/reader comments to the articles impugned his integrity causing him to lose clients. The plaintiff sued for various privacy tort and cyberbullying claims and the blog defendants moved to dismiss all counts. The Northern District dismissed most of the plaintiff’s claims.

Rules/Reasoning:

Intrusion on Seclusion

To state a claim for this tort, the plaintiff must allege (1) an unauthorized intrusion or prying into a plaintiff’s seclusion; (2) the intrusion is highly offensive or objectionable to a reasonable person; (3) the matters upon which the intrusion occurred were private; and (4) the intrusion caused anguish and suffering.

Prototypical examples of this tort include opening a person’s mail, searching someone’s wallet or safe and reviewing a person’s banking information. *14.

The court found that Plaintiff’s intrusion on seclusion claim based on user comments to the defendants’ article were protected by the Communications Decency Act, 47 U.S.C. 230(c)(1)(CDA), a statute that immunizes websites that simply republish information supplied by third parties.

Since the user comments – while offensive – couldn’t be attributed to the defendants under the CDA, the intrusion claim failed.  The court noted that in relation to the readers who posted comments on the blog articles, the defendants were simply “online information systems” that are not publishers under the CDA (see 47 U.S.C. 230(f).

Plaintiff’s argument that the blog defendants “incited” offensive user comments also failed. The court found that a website doesn’t incite unlawful comments simply by providing a forum for content. In addition, both defendants had detailed written policies that outlawed defamatory comments. Taken together, these facts defeated plaintiff’s “incitement” arguments. **4-5

The Court also dismissed the intrusion claim since the plaintiff at most alleged irresponsible (“shoddy”) journalism practices. He didn’t plead that either defendant pried into his personal affairs or violate any of his physical boundaries – an indispensable aspect of the intrusion tort. *14.

Intentional Infliction of Emotional Distress

This claim also failed.  An intentional infliction plaintiff must demonstrate (1) extreme and outrageous conduct that goes beyond all bounds of decency in a civilized community, (2) the defendant intended to inflict severe emotional distress on the plaintiff or know there was a high probability that the conduct would cause severe emotional distress; and (3) the conduct must in fact cause severe emotional distress.

Where intentional infliction is premised on published statements, if those statements don’t rise to the level of defamation, they necessarily can’t meet the even higher extreme and outrageous standard. *15

Here, the claims against the Jezebel blog defendants didn’t rise to the level of libel or extreme and outrageous conduct since the Jezebel posts were protected by the fair reporting privilege and because some of the content consisted of opinions, not facts.

But plaintiff did state a colorable intentional infliction claim against ATL for falsely reporting that plaintiff was charged with sexual assault twice (instead of once). 

ATL’s false statement that plaintiff had multiple sex assault arrests was defamatory per se – a false statement imputing the commission of a crime – plaintiff adequately alleged a cause of action for intentional infliction of emotional distress against ATL (as well as defamation).

Take-aways:

– Intrusion on Seclusion requires physical invasion of the plaintiff’s space or private domain;

– An online republisher isn’t responsible for provocative reader comments where it has written policies that outlaw offensive content;

– Inaccurate reporting doesn’t rise to the level of intrusion on seclusion or intentional infliction of emotional distress;